International divorce and taxation: lessons from a Franco-Swiss case for entrepreneurs

In a context where family and asset situations are becoming more complex with international mobility, the boundary between private life and tax responsibility is sometimes thinner than it seems. A recent decision from the Administrative Court of Appeal (CAA) of Lyon (June 12, 2025, No. 24LY02495) sheds light on this issue: it affects both individuals and entrepreneurs, particularly those operating or having interests beyond borders.

Beyond the family aspect, this case highlights crucial issues for any business leader or investor with an international structure or complex personal taxation. Let’s take stock.

A Divorce Case and Tax Oversight… with Serious Consequences

The case involves a French wife, separated from her husband who resides and works in Switzerland. Although they were married under the separation of property regime, she declared a zero income to the French tax authorities for the year 2015, while attaching a minor child and three adult children to her tax household. The problem: she failed to declare significant sums received from her husband.

Specifically, a non-conciliation order issued by a family court judge (JAF) had established:

Free enjoyment of the marital home for the wife;
A contribution of 4,500 euros monthly for the maintenance of three children;
An alimony of 5,000 euros monthly as a duty of support towards the wife.

Moreover, the tax administration discovered a capital gain from the sale of shares (related to a Swiss company acquired by a British firm), credited to the wife’s account, without any credible justification of its nature.

These undeclared sums led to:

A correction of income tax;
A 40% increase for deliberate non-compliance.

The CAA confirmed everything, dismissing the wife’s good faith arguments, particularly the idea that the tax administration had "accepted" her situation for previous years.

Tax Lessons for International Entrepreneurs

Beyond this singular case, this decision contains essential lessons for any entrepreneur, investor, or leader with cross-border flows or a complex marital status. Here are the main points of attention.

1. Financial Flows Between Spouses Are Not Necessarily Exempt

Even in the case of separation or divorce, sums received from a spouse must be examined with great caution. They can be reclassified:

As taxable income (for example, alimony subject to tax);
As income of indeterminate origin, if their exact nature is not justified.

In this case, the alimony and contributions to child expenses were considered as needing to be declared. The omission resulted in a double penalty: adjustment + penalty for deliberate non-compliance.

🔍 Note: even under a separation of property regime, the reciprocal obligations arising from marriage (duty of support, child support) have tangible tax effects.

For a French entrepreneur living or doing business abroad, these rules can have particularly sensitive effects. It is essential to declare any significant money transfer, even within a family context, under penalty of reclassification.

2. Tax Authorities Strengthen International Cooperation

The cross-border dimension of the case plays a central role. To control the consistency of declarations, the administration made use of international administrative cooperation with Switzerland.

In a second ruling (CAA Lyon, 24LY02497), the wife contested not having access to certain elements from the request for administrative assistance. However, the Court confirmed that there was no obligation on the administration to transmit the documents, as long as they were not directly used in the tax adjustment.

📌 For business leaders with assets or income abroad, this case illustrates the rise of automated exchanges of tax information. Even if this does not directly concern business management, unjustified flows between foreign and personal bank accounts can trigger tax audits.

It has thus become risky to consider personal taxation as a distinct and remote subject from business.

3. Tax Formalism Does Not Forgive: Document, Justify, Prove

Another lesson from this litigation is the crucial importance of formalism and justification of asset flows:

The taxed capital gain had passed through an account in the wife’s name;
She claimed that this sum did not belong to her, but was the repayment of a debt owed to her father by her husband… without being able to prove it.

Result: the burden of proof falls on her. The administration does not need to demonstrate exactly the origin of the funds as long as it observes an unjustified enrichment.

For innovators or start-up founders who have structured their assets (unlisted shares, intra-family donations, holding flows, etc.), this evidentiary rigor is essential. Any suspicious or unjustified payment can be reclassified and lead to litigation.

Even (and especially) when transactions occur in the private sphere, it is necessary to demonstrate:

The purpose and origin of the transfer;
Its refundable or notarially framed nature;
Its possible link with the company or legal obligations (shareholder agreements, loan contracts, etc.).

Practical Advice for Entrepreneurs and Companies in a Franco-International Context

Domestic taxation cannot be thought of independently from civil, family, and asset situations. Here are some good practices:

Before any international operation involving members of your household, seek legal business advice to anticipate potential tax effects.

If you are married (or about to divorce) and frequently receive or pay sums related to household maintenance or the duty of support, formalize these flows. Particularly through an order, a homologated agreement, or a clear contract.

If you hold assets abroad or carry out significant operations via accounts of close individuals, systematically document their origin or purpose (agreement, debt, transfer, etc.).

Finally, if you are a partner in a start-up or a beneficiary of an international share liquidation plan, ensure their correct tax treatment, even if the gain is temporarily placed in a personal account.

At PRAX Avocats, as lawyers specializing in supporting start-ups, we often observe this blur between private life and professional flows. Whether it is a divorce, a change of tax residence, or a phase of transfer, tax risks often lie in the details.

In Summary

This CAA ruling from June 2025 concretely illustrates how poorly anticipated defensive private management can generate serious tax consequences. This case law serves as a reminder for all entrepreneurs, particularly those operating internationally: in tax matters, the boundary between personal and professional life is porous.

Declare, document, anticipate: these three key words are essential in any context of money exchange, even among close ones, especially in the presence of a divorce or significant asset transfer.

For personalized legal support for your situation or business project, contact PRAX Avocats.